Our weekly crypto derivatives analytics report delves into macro events, the current state of crypto and trading signals from spot trading volume, and futures, options and perpetual contracts.

December's end-of-year options expiration brought an unexpected drop as realized volatility fell to the lowest levels of the month. Perpetual swap open interest remained stable, indicating these markets weren't heavily used for hedging against expired options, likely contributing to the muted volatility. 

While most expired open interest in Bitcoin (BTC) and Ethereum (ETH) hasn't been reinvested, the balance of calls and puts remains consistent. Notably, ETH options are pricing in higher implied volatility as compared to BTC, particularly for shorter expirations, leading to a flat term structure for ETH, while BTC is offering cheaper options exposure.

In the perpetual markets, low volatility and minimal spot movements have led funding rates for nearly all tokens to mirror broader market sentiment throughout the holiday season. On the options side, BTC's term structure is noticeably lower and steeper than ETH's, with realized volatility now dipping below implied volatility levels, highlighting an intriguing shift in market dynamics.

Please check out the report’s highlights.

Open Interest Solid Amid Year-End Options Expiration

Although open interest for both BTC and ETH perpetual swaps hasn’t returned to early December 2024 highs, it remained robust throughout the significant end-of-year options expiration event. This suggests that these markets weren’t heavily utilized to 

 of the expiring options contracts, likely contributing to the lack of volatility observed during this period. Instead, trading volumes have dipped noticeably during the winter holiday season, coinciding with a collapse in realized volatility back to December 2024’s lowest levels.

BTC Option Curve Remains Steep During Call-Put Parity

The expiration of December's end-of-year options didn’t trigger the anticipated surge in volatility; instead, realized volatility has plummeted to the lower end of its recent range. The implied volatility term structure remains steep compared to both its recent behavior and ETH's, with longer-dated implied volatility around 57%, and 1-week at-the-money options trading about five points lower. Much of the expired open interest hasn’t yet been rolled into new positions, maintaining a neutral balance between puts and calls. Consequently, BTC's options market positioning is relatively neutral, lacking the leverage it had at the start of December 2024.

Huge ETH Option Expiring Doesn’t Cause Volatility

A late December spike in realized volatility didn’t carry into the new year, with ETH’s spot price currently exhibiting volatility below that of short-tenor implied volatility. Interestingly, the implied volatility term structure has undergone a steepening and re-flattening over the past week, contrasting with BTC’s slightly steeper profile. This suggests that ETH’s options market is anticipating higher short-term volatility in spot price movements. 

Despite the significant expiration of options open interest at the end of December 2024, which didn’t lead to a rollover into later expirations, call options continue to dominate the market and have increased at the start of 2025.

Advanced

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Bybit X Block Scholes Crypto Derivatives Analytics Report (Jan 2, 2025): BTC Options Continue to See Call-Put Parity, With Lower Short-Term Volatility Expected

Dive into FLock, a decentralized platform that revolutionizes the way AI models are developed, trained and deployed.

Artificial intelligence (AI) is poised to transform countless industries, but its development often raises questions about privacy, control and inclusivity. 

 is a unique decentralized platform that democratizes AI training, fine-tuning and inferencing. With its blockchain-powered infrastructure, FLock ensures transparency, security and community-driven decision-making, paving the way for AI models that align with established societal values. 

In this article, we’ll explore how FLock decentralizes AI training, its key features and its potential impact on developers, communities and users.

 platform that revolutionizes the way AI models are developed, trained and deployed. By leveraging blockchain technology and a novel approach called 

, FLock addresses critical issues in AI development, such as centralized control, lack of transparency and privacy concerns.

At its core, FLock’s mission is to democratize AI by enabling communities to participate directly in the creation and refinement of AI models. Through federated learning, FLock trains AI models across multiple decentralized devices or servers. This method ensures that data remains local, eliminating the need for raw data exchange while still enabling robust model training. By decentralizing the training process, FLock not only protects individual privacy, but also fosters a more inclusive ecosystem in which diverse contributors can collaborate.

What sets FLock apart is its integration of 

. This ensures that all contributions — whether data, compute power or feedback — are transparently recorded and fairly rewarded. Blockchain tech’s immutable ledger enhances trust among participants and safeguards the process against manipulation. Additionally, the platform’s on-chain incentive mechanisms encourage participation from a wide range of contributors, ensuring that rewards are distributed equitably.

Ultimately, FLock empowers communities to develop bespoke AI models tailored to their specific needs. By decentralizing the process and prioritizing transparency and collaboration, FLock breaks the monopoly of large corporations, creating an AI ecosystem that aligns with public ethics and societal values.

, an Oxford alumnus with a robust background in AI and blockchain technology. Sun, who serves as FLock's CEO, has an impressive career trajectory, having worked as the Director of AI for the Royal Bank of Canada and as an AI Research Fellow at Imperial College London. His vision for FLock stems from a deep understanding of both the technical and ethical challenges of AI development.

The founding team also includes other Oxford alumni, boasting over a decade of combined experience in AI research and the cryptocurrency industry. This team brings a collective blend of academic excellence and practical expertise that positions FLock to lead the decentralized AI movement.

FLock has successfully raised $11 million in funding across two rounds, reflecting strong investor confidence in its vision. In May 2024, FLock secured a $6 million seed round co-led by Lightspeed Faction and Tagus Capital, with additional backing from Digital Currency Group (DCG), Volt Capital, OKX Ventures and Inception Capital.

Later, in December 2024, FLock announced a $3 million successful funding round led by DCG and joined by prominent names like Animoca Brands, Fenbushi Capital, GnosisVC and GSR. These investments are being channelled into enhancing the platform’s testnet and federated learning client, accelerating FLock’s mission of enabling secure, collaborative AI development.

With this funding and over 1,500 nodes contributing from platforms like Numerai and Kaggle, FLock is rapidly scaling its impact on decentralized AI training.

FLock AI revolutionizes AI development through its decentralized training framework. This approach allows participants to contribute to AI model training without ever sharing their personal data. Instead, models are trained locally across devices using federated learning, which ensures that data remains with its owners while still enhancing the accuracy of the model overall. 

FLock’s reward system is designed to incentivize active participation. Contributors who provide data, computational power and/or feedback are compensated with FLOCK tokens, ensuring a fair distribution of rewards. 

FLock empowers its community through a robust governance framework. Decisions regarding AI model development, deployment and ethical considerations are driven by the community, ensuring alignment with established societal values. Through blockchain-based voting mechanisms, contributors can influence the direction of AI projects, fostering transparency and public accountability. 

FLock’s modular architecture allows contributors to participate in specific aspects of AI model development. Whether providing raw data or computational power or even refining algorithms, the platform enables a collaborative and scalable development process. 

At the core of FLock’s philosophy is its commitment to privacy and security. By leveraging blockchain technology, the platform ensures that no single entity controls the AI development process. Data remains local and protected by cryptographic measures, while the immutability of blockchain guarantees transparency in every transaction and model update. 

 begins with a blockchain and an AI layer.

The blockchain layer underpins FLock’s incentivization and security mechanisms.

The AI layer facilitates model training, refinement and deployment, leveraging both centralized and federated approaches.

Let’s have a look at the supply and demand for the FLOCK token.

FLock adopts a 1:2 ratio model between team/investors (33.3%) and community (66.7%), prioritizing community-driven growth and ecosystem expansion. The majority of tokens are allocated to incentivize user participation and long-term ecosystem success.

FLock aims to improve the future of AI development by decentralizing the training process and ensuring transparency, privacy and inclusivity. By leveraging blockchain and federated learning, FLock empowers communities to contribute to AI creation without compromising on privacy. Its innovative reward system and community-driven governance foster a fair and collaborative ecosystem. 

With significant backing and a growing network of contributors, FLock is positioning itself as a leader in decentralized AI, offering a more ethical and secure alternative to traditional AI development models. As it continues to scale, FLock is set to transform the way AI models are built and deployed.

 — and earn a share of a 10 million FLOCK prize pool. For more details, visit 

Intermediate

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FLock AI: Decentralized AI Training

In this tutorial, we’ll explore how you can complete a series of tasks in Network3 for Bybit Web3 Airdrop Arcade.

Task 1: Register for a Network3 Account and Connect Your Bybit Wallet 

: Navigate to the campaign page and click on the 

task. Click on the task, and Galxe will ask to redirect you to the Network3 register page.

: Register for a Network3 account using your email address. You may indicate a 

Task 2: Download the Network3 App and Run a Node for One Hour

 and choose your operating system to download the Network3 app.

 or powerbutton, depending upon which operating system you’re using. For ease of reference, we’ve used macOS and iOS as examples below.

: Keep running the node until the timer reaches 

Beginner

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How to Complete Network3 Tasks for Bybit Web3 Airdrop Arcade

Bybit launched the Bybit Merch Creative Challenge for university students worldwide, offering a $50,000 USDT prize pool.

The S&P 500 dropped 0.22% on Thursday, its fifth straight decline, with investors eyeing Friday’s economic updates. Coindesk Indices, an index measuring broader cryptocurrency market performance was up by 2.03%, with Bitcoin and Ether rising by 2.79% and 2.70%, respectively in the past 24 hours.

Today's top performer is XRP, which surged 1.9% following a rise in price driven by increased open interest and positive market sentiment.

Ripple (XRP), launched in August 2012, is a blockchain technology company focused on improving international payments with its cryptocurrency, XRP. XRP price surged due to increased open interest, a major XRP transfer, and market sentiment linked to Trump's inauguration. Bullish momentum is supported by high short liquidations, with key resistance levels to watch for further price movement.

Check Out the Latest Prices, Charts, and Data of 

 for university students worldwide, offering a $50,000 USDT prize pool. Participants can design exclusive Bybit merchandise, with submissions open until Jan. 15, 2025. Winners will be announced on Feb. 1, 2025, across four prize categories.

Yesterday, Bitcoin Spot ETFs recorded a total inflow of $84.8M, driven by $107.9M from non-GBTC funds, partially offset by a $23.1M outflow from GBTC.

, offering an airdrop for participants who complete tasks like swapping and bridging using the Mango wallet. Points earned through tasks determine airdrop rewards. Join via the Mango wallet and follow steps on the testnet dashboard.

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Bybit Launches $50,000 Merch Design Challenge for University Students Worldwide

Bybit Learn

Options

What happens when options expire within the stated strike price? Can any action be taken to keep the option contract active? Learn more here.

The number one reason why some crypto traders tend to avoid trading 

 entirely is because they’re afraid of the complexities involved with options expiration. With the 

 in play, throwing expiration dates into the mix can certainly be daunting for anyone new to the world of derivatives learning how to extract the most profit when trading them. 

What happens to the crypto once the contract expires within the stated strike price? Can any action be taken to keep the option contract active? 

Find the answers to these queries and more with our ultimate guide to options expiration, as we explore what happens when options expire — and what you can do as an options trader if you’re faced with a low days-to-expiration options (DTE) contract.

 are contracts that grant the holder the right to buy or sell an underlying asset at a specific price on or before a predetermined expiration date. While options may provide traders with greater potential returns, they also carry significant downside risk. These factors are ultimately why options are seen as advanced financial 

 best suited to experienced traders who understand the risks involved.

Options are a derivative instrument, meaning that the price of an options contract is derived from the underlying asset. An option gives its holder the right (but not the obligation) to buy or sell a predetermined amount of the underlying asset at a specific price, known as the strike price, on or before the expiration date. 

 grants the holder the right to sell an asset for a specific price on or before the specified expiration date, while a 

 grants its holder the right to buy an asset at a certain price on or before the expiration date.

In exchange for this right, options contracts require payment of a premium. The premium is determined by several factors, including how much time is left until expiration and how far away from the strike price the asset is trading in relation to current market prices. 

 in options contracts look for prices of underlying assets to move above their strike prices before expiration, so they can realize a profit on their position. Conversely, traders with short positions in options contracts look for prices of underlying assets to move below their strike prices before expiration, so they can realize a profit on their position.

The ability to leverage gains with relatively small up-front costs makes options attractive instruments for many traders and investors. However, these same features can also lead to potential losses if the market turns against them. When trading with options it's important for traders to understand how these instruments work, so that they can make informed decisions about when and how much money they should risk with each trade — and protect themselves against any potential losses.

What Are Your Choices Before the Options Expiration Date?

On or before the option's expiration date, traders have several choices to consider, depending upon their market outlook and risk tolerance. Here are the possibilities:

One big reason why options sometimes strike fear among traders is the additional dimension of time that’s factored into the calculation of options premiums. Unlike simply trading shares on the equity market, the options you’re trading can possibly be worth nothing by the time they expire. This is because of their days-to-expiration (DTE), which can cause option premiums to vary considerably the further they are from expiration. 

Curious about what happens to options contracts when they expire? In the following section, we’ll take a look at various examples of options at expiration.

If the options contract is expiring in the money (ITM), meaning that the underlying asset is trading above or below the strike price (for call and put options, respectively), then it will automatically be exercised. This means that if you hold a bought call option, you’ll receive the agreed-upon quantity of the underlying asset at the specified strike price.

Short positions in options contracts will automatically be exercised as well, which can result in a loss if your short position is ITM at expiration.

If the options contract is expiring out of the money (OTM), meaning that the underlying asset is trading at or away from the strike price (for call and put options, respectively), then it will 

. No action needs to be taken, as the options contract will simply expire.

Options traders should note that when options are expiring OTM, it’s possible to receive some value from them by selling them in the open market before expiration. This can result in reduced losses for traders with short positions, and potential gains for traders with long positions. However, they must act quickly so that they can take advantage of this opportunity.

Options expiration dates are typically fixed for the third Friday of each month; however, this can vary depending upon the exchange and the underlying asset. In some instances, if there’s a demand, the asset may offer weekly options that expire every Friday so traders can take advantage of the added flexibility when it comes to contracts with different expiration dates to pick from. 

All in all, it’s important for traders to know when their options contract is set to expire so they can take appropriate action ahead of time if needed.

What Can You Do as an Options Trader Faced With Low Days to Expiration?

When faced with a low DTE options contract, traders have several choices, as outlined above. Each of these alternatives can be beneficial in different scenarios, depending upon the trader's market outlook and risk tolerance. It’s important to remember that options trading carries inherent risks, so it’s essential that traders understand how these instruments work before embarking on any of these strategies.

How to Choose the Right Options Expiration Date

Before you determine the optimal options expiration date, it’s first important first to understand the Greeks and how Theta plays a part in options premium calculations. 

In short, Theta refers to the rate of decline in the value of an option due to the passage of time. It measures the inevitable loss in the premium’s value as time passes. 

Because crypto options contracts have a fixed expiration date, each passing day represents one day less for an exponential move in the ideal direction as the contract heads toward maturity. That’s why Theta is represented as a negative number for long positions and as a positive number for short positions.

Now that we’ve established an understanding of Theta decay for options contracts, we can better understand the optimal days-to-expiration that crypto options traders must consider when deciding to purchase or write options. While traders typically have their preferences when it comes to DTE, some experienced options writers live by the 

 — because 45 DTE grants options short sellers the right balance of accelerating 

 decline, thanks to Theta decay and a large enough extrinsic value premium to warrant the trade entry.

This 45 DTE rule aside, personal preference will ultimately decide how one chooses their options expiration date. This is because long options traders have to decide whether to give enough time for the underlying crypto to move in the anticipated direction, and if that time is worth the additional premium. Conversely, short option traders will have to determine if the extra premium earned from Theta decay is worth the risk of the underlying asset’s price suddenly becoming volatile.

In an ideal environment, options traders should strive to keep their options from expiring, regardless of whether an option is expiring ITM or OTM. This is because traders will be sacrificing the extrinsic aspect of the options contract, which falls over time (thanks to Theta decay). However, there are situations when attempting to salvage a crypto options trade may do more harm than simply letting it expire. In such situations, it may make sense to simply let the options contract expire. For instance:

Options are powerful financial instruments with the potential to generate significant gains for experienced traders who understand how they work and the risks involved. The expiration date of options contracts is an important factor to consider, as it determines when the contracts will expire and whether they’ll be worth anything at the end. 

From explaining the intricacies of options expiration to going in-depth with Theta decay, we hope our guide has been helpful in aiding options traders like yourself assess your ideal DTE. 

When analyzing the cost and benefit of trading options (while taking volatility and Theta decay into account), there can be a fine line between deciding whether it’s preferable to salvage an options trade or simply let it expire. Regarding options expiration dates, crypto options traders must weigh their choices in light of the capital they’re risking and the potential upside that can come from that risk.

Options Expiration: What Happens When Options Expire?

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards